- Moody’s downgrades Hungary’s bond rating to Baa3 from Baa1: outlook negative
- Ireland ‘likely’ to leave euro – Irish Times
- German govt spokesman: Germany rejects euro zone bonds. Sees absolutely no necessity for an increase of size of EU rescue funds (bah humbug)
- Spain PM Zapatero: Will decide on extending state of emergency depending on situation
- Euro zone sentix index falls to 9.7 in December, down from 14.0 in November and weaker than median forecast of 11.0
- ECB’s Orphanides: Optimistic on Greece, says Greek govt shown determination
- China’s credit bubble on borrowed time as inflation bites – AEP at The Telegraph
- China’s Pres Hu: In call with Obama, says China, US have wide common interests to cope with global financial crisis
- LCH. Clearnet cuts margin on Irish govt debt. Cuts margin on 10 year Irish govt bonds to 30% of net positions from 45%
- Firewall needed as eurozone stands on brink of meltdown – Sir John Gieve, former Dep Gov of Bank of England
Bernanke came and went. Whilst he didn’t rule out further QE, his comments on 60 minutes were deemed more measured than some had feared. This has prompted some dollar shorts to cash in their chips.
At the same time German/euro zone periphery bond spreads have widened out again after last weeks’ improvement. Nothing too major though.
EUR/USD down at 1.3280 from early 1.3340 having been as low as 1.3249. Stops were tripped through 1.3330 and 1.3270 helping accelerate the move. Major German commercial bank was a notable seller early and was quckly joined by Bank of Korea, Russia and Middle Eastern sovereign. BIS bought in 1.3280/85 area on the way down but was overwhelmed.
Hedge fund buying in late morning trade has however helped limit the damage to the euro.
USD/JPY at 82.90 effectively unchanged during the European morning. Talk of barrier option interest down at 82.50. Option-related bids ahead of said interest and Kampo also noted down at the lows in Asia. Sell stops through 82.50. Sell orders clustered up around 83.00 with buy stops through 83.10.
Cable down at 1.5680 from early 1.5730. Talk of decent sell orders clustered up around 1.5800.
